Warning on borrowing costs

The Royal Institution of Chartered Surveyors (Rics) has warned borrowers over the amount of money they are taking from lenders.

The Royal Institution of Chartered Surveyors (Rics) has warned borrowers over the amount of money they are taking from lenders.

As property prices have continued to rise over the past year, the Bank of England has tried to keep a lid on inflation by increasing interest rates by a full percentage point since August last year, meaning the cost of borrowing has escalated.

Figures from the Council of Mortgage Lenders (CML) have revealed that the amount borrowed in May this year was a record for the month, despite the increased cost of borrowing.

However, with further interest rate rises forecast for later this year, Rics has warned buyers to seriously consider how much money they are prepared to borrow.

Oliver Gilmartin, a senior economist at Rics, said: "House buyers should be cautious about borrowing record volumes at a time when borrowing costs for both fixed and variable rate mortgages are likely to rise further. The current squeeze on disposable incomes will continue, making affordability levels deteriorate even further."